A new transportation bill is being referred to as ‘devolution lite.’ Two years of funding provides a reprieve, but a lack of federal mission poses a dichotomy.

By Tina Grady Barbaccia

Now that the much-anticipated new highway bill has been passed, Congress and the transportation construction and equipment industries should be resting easier with guaranteed funding through the end of September 2014.

The $105 billion, 27-month legislation, Moving Ahead for Progress in the 21st Century, a.k.a. MAP-21, that passed on July 5, authorizes funding for highways, highway safety, and transit for fiscal years 2013 and 2014 at a level slightly higher than fiscal year 2012, but slightly below the Safe, Accountable, Flexible, Efficient Transportation Equity Act — A Legacy for Users, or SAFETEA-LU, the previous surface transportation bill that expired on Sept. 30, 2009, and underwent 10 extensions before Congress made compromises to move the bill forward for President Obama’s signature.

[2]However, resting easier might end up being a short nap for the industry. “This was a tortuous process, but it was ultimately successful,” Jack Schenendorf, of counsel with the Washington, D.C.-based law firm Covington & Burling LLP, said in the “MAP-21: What’s in it for my business?” webinar hosted by the National Stone, Sand & Gravel Association (NSSGA). “[However], I think there has been a loss of credibility in the [highway] program. MAP-21 is being referred to as ‘devolution lite.’”

Not only is there “no clear federal mission,” he noted, but the bill’s passage represents a dichotomy and poses the question, “Is this program trying to build America’s future or simply handing out pork?” What’s more, Schenendorf added: “There is plenty of money to meet legitimate transportation needs if it stopped being wasted on bad or low-priority projects.”

Despite these negatives, there is some good to come from MAP-21 besides just short-term funding, Schenendorf noted. There are programmatic reforms regarding consolidation, formulas, earmarks, enhancements, and freight. Performance management and streamlining are also positive outcomes. The consolidation establishes four core programs — the National Highway Performance System, the surface transportation program, the Highway Safety Improvement program, and the CMAW program — plus metropolitan planning. The consolidation also reduces the number of programs — e.g. interstate maintenance, bridges, safer routes to schools, recreations trails, etc. — by two-thirds.

[3]The new law requires the U.S. Department of Transportation (DOT) to establish performance standards within 18 months in several areas, including safety, infrastructure condition, congestion reduction, system reliability, freight movement, environmental sustainability, and reduced project delivery delays. The performance standards may only be established after the DOT consults and coordinates with states, transit agencies, stakeholders, and metropolitan planning organizations (MPOs). Performance targets must then be established within a year after the DOT establishes performance standards, Schenendorf said. “MPOs must establish performance targets within 180 days of a state adopting performance targets, [and] performance measures and targets must be incorporated into long-range planning and short-term programming processes.”

The program will be run around these performance standards. “This is really changing how money is reinvested,” Schenendorf says. “It’s more of a performance-based approach.”

What does the future hold?

Now that the bill has passed, it’s time to move ahead to implementation, regulation, and, ultimately, reauthorization. “The next Congress will have to go through a similar process, and it’s right around the corner,” Schenendorf said. “A lot will be happening as we go forward. We will face very significant challenges. We all know what needs to be done — there needs to be more revenue in the Highway Trust Fund (HTF).”

In the short-term, the gas tax is still the best vehicle to raise money. Alternative measures, such as vehicle miles travelled, or VMT, do not produce enough revenue, Schenendorf purports. In the long term, funding — even through the gas tax — poses problems, he says.

That’s where a new strategy comes in: innovative thinking. Two of the best opportunities might be tax reform and grand bargaining. “Early next year, there will be a lot of talk of tax reform and a grand bargain,” Schenendorf said. “There is a very strong feeling that these might be the best ways to get the gas tax increase.”

If tax reform and a grand bargain are unsuccessful — or Congress merely puts off both — the industry faces the reality of achieving this through a standalone transportation bill, which Schenendorf says, may be very difficult. “Everyone is taking a deep breath after MAP-21 passed,” Schenendorf said. “It’s going to be important to very carefully monitor and participate. This requires a lot of regulations to be written. It will be important for the DOT to make sure it gets it right. Start planning for reauthorization now. They’ll have 18 months to do it once the new Congress comes in.”

The U.S. Department of Transportation’s (U.S. DOT) decision to take $473 million from 671 unused 2003 to 2006 earmarks could be likened to a Robin Hood scenario — stealing from the rich to help the poor — but it could also get the transportation industry moving.

Under current legislation, the Obama Administration has had the authority to rescind the earmarks, but this is the first time it has been done, according to the U.S. DOT.

Each state’s unused funding will remain allocated to that state, as long as the work can begin by year-end 2012.

State DOTs must submit a plan for the use of the money to the U.S. DOT, and any funds not obligated by Dec. 31 will be redistributed to other states. Funds not obligated by the Dec. 31 deadline will be proportionally redistributed in FY 2013 to states that met the deadline.

Secretary of Transportation Ray LaHood says this decision to make the unspent earmarks immediately available to other states “will create jobs and help improve transportation across the country.”

Effective Aug. 17, state departments of transportation have the ability to use their unspent earmarked highway funds, some of which are nearly 10 years old, on any eligible highway, transit, passenger rail, or port project, according to the U.S. DOT.

President Barack Obama says his administration “will continue to do everything [it] can to put Americans back to work. We’re not going to let politics stand between construction workers and good jobs repairing our roads and bridges.”

Federal Highway Administrator Victor Mendez says “states will be able to put these dollars to good use,” especially during the current economic difficulties. “These funds will create jobs in the short term and help bring about what President Obama called ‘an America built to last,’” Mendez noted in a written statement (http://www.fhwa.dot.gov/pressroom/pr0306earmarks.htm[6]) from the U.S. DOT.